Li & Fung Limited AGM 2003

Company:	Li & Fung Limited
Stock code:	0494
Date of meeting:	12-May-03
Time of meeting:	12:00
Advice date:	28-Apr-03
CCASS voting cut-off	7-May-03
Notice of Meeting:	Click here
Voting method:	Webb-site.com will require a poll, all proxies will be counted

Note to journalists:
We have up to 4 proxy seats available inside this AGM. Please contact us if you want one.

Item	Description	Vote
1	Adopt the accounts	FOR
2	Declare a final dividend	FOR
3.1	Re-elect Henry Chan	FOR
3.2	Re-elect Franklin Warren McFarlan	FOR
3.3	Re-elect Leslie Boyd	FOR
4	Determine the directors' fees (see comment)	FOR
5	Re-appoint PriceWaterhouseCoopers	FOR
6	Mandate the directors to repurchase shares	FOR
7	Mandate the directors to issue additional shares	AGAINST
8	Mandate the directors to issue repurchased shares	AGAINST
9	Approve the Share Option Scheme	FOR
10	Amend the Company's Bye-laws	FOR
11	Adopt a Chinese name	FOR

Reasons AGAINST

Items 7 and 8

Webb-site.com urges all investors to vote against the general issue mandate for all listed companies, for the reasons explained in Project Vampire, unless they comply with the recommendations set out in that article. The non-pre-emptive issue mandate allows management to choose the shareowners by allotment of shares. This corrupts the governance mechanism. Shareowners should govern management, not the other way around. If a company wishes to raise cash by issuing shares, then it should do so by rights issue.

Comment & warning

The proxy form includes item 4 "To determine the Directors' fees" and invites shareholders to vote "for" or "against". How are shareholders voting by proxy supposed to know what dollar amounts of fees they are voting for? Neither the notice of meeting nor the proxy form specifies any amount. The notice should have stated the amount proposed, as was the case in the HKEx Notice of AGM. We will give L&F latitude on this occasion, because we want the independent directors to be paid fees, but next year, if the proposal is not spelt out in the notice of AGM, then we will recommend against such a vague proposal. It is not sufficient to simply come up with a proposed figure at the AGM, which is presumably what is intended this time. By then, it is too late for absent shareholders to change their vote.

Meanwhile, we call on L&F to rectify this omission, by making an announcement to the Stock Exchange without delay stating what amount the board intends to propose as directors' fees at the AGM. There is still time left to clarify the matter.

Educational note: directors fees are simply the amount paid to individuals as directors. For non-executive directors, that is usually all they get. In the case of executive directors, their other remuneration, such as salaries and bonuses, are not subject to shareholder approval.

Important notice: All material on this site, except where otherwise accredited, is copyright to Webb-site.com. Media and researchers are welcome to quote from articles on this site, provided that such quotation is attributed to Webb-site.com. The information in this site should not be relied upon by any person in making any investment decision. No responsibility or liability is accepted by Webb-site.com or any person related to it for any loss arising from or in reliance upon the whole or any part of the contents of this site. Persons who are in any doubt about an investment or potential investment should take professional investment advice. From time to time parties associated with Webb-site.com may own long or short positions in securities issued by or related to companies or governments on which we comment.

Voting recommendations

Reasons AGAINST

Items 7 and 8

Comment & warning